The U.S. stock market finished the week higher as earnings season began with big banks reporting better than expected results. Interest rates also moved higher as the 10-year treasury yield increased by 6 basis points to 2.56% amid better than expected inflation data. However, the spread between the 10-year treasury yield and the 2-year treasury yield dropped slightly as it narrowed from 0.19% to 0.17%. The price of gold was little changed as it fell 0.12% to $1,294 an ounce. The U.S. dollar index (DXY), which tends to move inversely to the price of gold, was also little changed as it goes from 97.41 to 96.97. The price of crude oil increased by 0.74% to $63.78 a barrel.
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This Week’s Economic Highlights
- Factory orders fell by 0.5% in February, while January’s factory orders were revised downward from 0.1% to 0.0%. The drop in factory orders can primarily be attributed to a decrease in orders of machinery and electronic products.
- The Consumer Price Index (CPI), a measure of retail inflation, jumped 0.4% in March. Driving the index higher were large increases in food, gasoline, and rent prices. Core CPI, which excludes the volatile food and energy prices, only increased 0.1%. Over the trailing twelve months CPI and Core CPI have grown at a rate of 1.9% and 2.0%, respectively.
- Initial unemployment claims dropped by 8,000 to 196,000 for the week ending April 6th, marking its first time below 200,000 since 1969. Continuing unemployment claims, which lag initial claims by a week, fell by 13,000 to 1.71 million.
- The Producer Price Index (PPI), a measure of wholesale inflation, surged 0.6% in March as gasoline prices continue to rise. However, core PPI, which excludes the volatile food and energy prices, was unchanged for the month of March. Year-over-year PPI and core PPI have increased at a rate of 2.2% and 2.0%, respectively.
“The market will not go up unless it goes up, nor will it go down unless it goes down, and it will stay the same unless it does either.”
– George Goodman